🌐 The Bank of Japan has stopped raising interest rates, and there is no chain reaction to the global economy for the time being?
📉 Listen! Makoto Sakurai, a former member of the Bank of Japan, said that there will be no more rate hikes this year. On August 12, he issued a report saying, "At least for the rest of the year, they will not raise interest rates again." Remember when the Bank of Japan suddenly lowered interest rates to 0.25% in early August? That really caused a big drop in the stock market and cryptocurrency market.
💸 So why did the rate hike have such a big impact? Mainly because it disrupted the yen carry trade, which is that investors borrow yen at ultra-low interest rates and then buy foreign assets. But what really turned the market upside down was the yen's surge in the foreign exchange market, from 153 yen to the dollar to 145 yen. This made the cost of borrowing in yen soar overnight.
📈 Although this rate hike has caused a bit of panic in global markets, Sakurai feels that this is a necessary step for Japan. After all, Japan's interest rates have been between 0 and -0.1% for 17 years. "It's a good thing to go from almost zero interest rates to a normal 0.25%," he said. He also thinks it's wise for the central bank to "wait and see" what to do next.
💸The view is that the Bank of Japan's interest rate hike may make the yen more valuable, which is a challenge for Japanese exports because goods become more expensive and sales cannot be increased, which may lead to commodity stagflation. At the same time, the interest rate hike may make global investors invest their money in Japan because the returns there are higher, which will also affect the balance of financial markets in other countries.
🌟In addition, the interest rate hike may also be a signal for central banks in other countries to consider adjusting their own interest rates. And for countries and companies that have borrowed a lot of yen debt, the interest rate hike means that they have to pay more money back, which may bring them some economic pressure.
🤔 Although the Bank of Japan said it did this to make its economy healthier, its impact on the global economy still needs our continued attention.
💬 So, what do you think? Is the impact of the yen interest rate hike on the market good or bad? Is the Bank of Japan's wait-and-see strategy a wise move? Has the cryptocurrency market stabilized and is no longer afraid of panic selling and falling prices? Leave your thoughts in the comments section!
